1、Defense manufacturing in the AI eraUsing AI to scale capacity and meet rising demandIBM Institute for Business Value|Research BriefForewordDefense manufacturing is rapidly emerging as a strategic priority across the Middle East,with the UAE and Saudi Arabia leading a concerted push to build advanced

2、 domestic capabilities.Both countries are investing heavily to strengthen local production ecosystems and reduce dependence on foreign suppliers.As these initiatives accelerate,defense industrialization is set to become a central pillar of their broader nonoil diversification agendasexpanding nation

3、al capabilities and enhancing longterm economic resilience.In 2024,world military expenditure reached over$2.7 trillion,an increase of 9.4%in real terms from 2023,and the biggest yearoveryear increase in over 30 years.1 Escalating geopolitical tensions and shifting strategic alliances have triggered

4、 what financial analysts call a“defense supercycle”sustained by longterm military spending.2 In Europe,members of the NATO alliance are committed to meeting and exceeding the 2%GDP spending target to modernize equipment and replenish stockpiles.3 In Germany alone,a 100 billion special fund has been

5、appropriated to rapidly overhaul the nations armed forces.4For defense manufacturers,this new geopolitical landscape represents an unprecedented strategic opportunity,providing the financial resources to enable a capitalintensive transformation driven by AI.In a new IBM Institute for Business Value(

6、IBM IBV)survey,threequarters of defense manufacturing executives report strong senior leadership support for AI and believe it will help their organizations respond more quickly to market disruptions.In this context,AI should be seen as a powerful enabler across operations,data ecosystems,and techno